MORTGAGE holders in Newcastle and Lake Macquarie are set to face greater financial pain after the Reserve Bank of Australia raised rates for the fifth consecutive month.
The official interest rate jumped 0.5 per cent bringing it to 2.35 per cent and at a seven-year high on Tuesday.
That will add an extra $213 a month repayments for an $892,239 mortgage, which is the median price of a house in Newcastle and Lake Macquarie, according to comparison site Canstar.
Over the past four months, such a buyer has been hit with $730 in extra monthly mortgage payments.
Jade Sparkes, who purchased a two-bedroom apartment in Merewether in July, is among those feeling the pinch with the news of another rate hike.
Ms Sparkes had a goal to own the apartment outright in the next few years but admitted that it might take longer with the rising cost of interest rates.
"I anticipate that my repayments will probably go up to almost $3,500 a month in which case I will need to make changes and be mindful of what I spend because I am paying the mortgage on my own," she said.
Ms Sparkes said she would have to consider taking on extra shifts at her nursing job to cover the higher repayments
"If there are more rate hikes to come then I will have to cut back on things and if it went up to $4000 a month, I would probably struggle," she said.
"I work as a nurse and I work Monday to Friday at the moment so if things became tight, I would have to look at picking up extra shifts on weekends."
Australia's official interest rate had been declining for 11 years before the first interest rate hike kicked in May this year.
CoreLogic's estimate of national home sales over the three months to August was tracking 14.8 per cent lower than the same period a year ago, highlighting that housing demand has already been dented by the recent cycle of rate hikes.
Lyndall Allan from Salt Property said the market had felt the effects of rising interest rates.
"There definitely is still demand out there but we are not seeing the crazy numbers and the frenzy that we were towards the end of last year," she said.
"We are still getting good numbers at open homes but it's basically back to real estate as normal."
The increase is in line with economist predictions and comes as RBA governor Philip Lowe says the bank is committed to returning inflation to the 2-3 per cent range.
"The Board is committed to returning inflation to the 2-3 per cent range over time. It is seeking to do this while keeping the economy on an even keel. The path to achieving this balance is a narrow one and clouded in uncertainty, not least because of global developments," Mr Lowe said.
Mr Lowe said that the RBA would be paying close attention to how rate rises are affecting household budgets before deciding on its next rate move.
"Higher inflation and higher interest rates are putting pressure on household budgets, with the full effects of higher interest rates yet to be felt in mortgage payments. Consumer confidence has also fallen and housing prices are declining in most markets after the earlier large increases," he said.
He indicated that future rate rises were likely in store, but when and by how much had yet to be determined.
"The Board expects to increase interest rates further over the months ahead, but it is not on a pre-set path. The size and timing of future interest rate increases will be guided by the incoming data and the Board's assessment of the outlook for inflation and the labour market."
